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Europe's Equities Catch-Down To Credit

Tyler Durden's picture




 

European equity indices are plunged today - extending the losses from the US yesterday - with Spain and Italy underperforming. Spain's IBEX is now -1.4% from pre-EU Summit levels though the rest are all green still (with Italy's MIB lowest of the rest at +1.5%). However, it seems that broad European stocks are finally catching-down to the dismal weakness in European credit (both financials and corporates) since the EU Summit. Europe's sovereign bond spreads all leaked wider on the day (be careful with yields since the benchmark 'safe havens' are so bid right now thanks to the flood of deposits into the front-end of German, Swiss, Dutch, and Austrian repo-able instruments). Spain and Italy remain wider than pre-EU-Summit levels (marginally) - though today saw the CDS-cash basis (as we noted in the pre-European open was likely) compress on these as Spain's 5Y CDS tests 575bps again. EURUSD broke 1.22 - new two-year lows - and is closing the Europe session below that level but the EUR crosses are all heading towards record lows (interestingly watching EURJPY as chatter is a rotation from JPY to EUR as a funding currency). German 2Y joined Swiss 2Y in the NIRP world as we note that the Swiss curve us now negative out to 5Y once again.

European equity indices remain green post EU Summit (except Spain) but are rolling over quickly...

as they play catch-down to European credit markets...

and just like financial credit, Europe's sovereigns are back at unch from pre-EU-Summit levels...

European Senior-Sub spreads continue to decompress...

and US VIX continues to converge to its empirical link to Europe's VIX (as we suggested)...

 

Charts: Bloomberg

 

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Thu, 07/12/2012 - 11:55 | 2610076 fonzannoon
fonzannoon's picture

whats the rumor that is sending equities  and gold moving?

Thu, 07/12/2012 - 11:58 | 2610082 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

That we the people are taking back the money supply by buying as much silver as we can tomorrow.

Buy silver

Thu, 07/12/2012 - 12:00 | 2610088 tocointhephrase
tocointhephrase's picture

Silver shock BITCHEZ!

Thu, 07/12/2012 - 12:02 | 2610094 knukles
knukles's picture

Oh, let's just have some yucks and make fun of Paul "Unicorn" Krugman

Thu, 07/12/2012 - 12:07 | 2610115 eclectic syncretist
eclectic syncretist's picture

Krugman's looking forward to getting probed by the aliens just before they stimulate the economy.

Thu, 07/12/2012 - 12:06 | 2610111 swissaustrian
swissaustrian's picture

Looks like we're about to get a key reversal in silver today. Opened lower, made a spike low and is now higher than yesterday.

Thu, 07/12/2012 - 12:01 | 2610089 JustObserving
JustObserving's picture

Europe does not have the Fed buying S&P futures to goose the market.  They are amateurs at manipulation.

Thu, 07/12/2012 - 12:03 | 2610096 tocointhephrase
tocointhephrase's picture

City of London Corporation? Pure Amatures /sarc

Thu, 07/12/2012 - 12:01 | 2610092 Never One Roach
Never One Roach's picture
Greek jobless hits record, may edge higher still

 

ATHENS (Reuters) - Greek unemployment hit a record 22.5 percent in April and may keep edging higher, with even the key tourism sector unlikely to provide more than fleeting support over the summer as visitors stay away from the recession-hit country.

 

http://money.msn.com/business-news/article.aspx?feed=OBR&date=20120712&i...

Thu, 07/12/2012 - 12:03 | 2610101 eclectic syncretist
eclectic syncretist's picture

WTF!  CNBC is reporting on wall street traders taking testosterone to get an edge????

http://finance.yahoo.com/news/beefy-wall-streeters-traders-rub-185904441...

Better tell those OWS protesters to watch out!

Thu, 07/12/2012 - 12:09 | 2610124 SheepDog-One
SheepDog-One's picture

While US equities regain euphoria after deep depression 2 hours ago as Manic/depressive markets receive Hopium tablet I guess and look to regain all losses by close. 

Thu, 07/12/2012 - 12:10 | 2610129 falak pema
falak pema's picture

Underperformed? They should sink 40% or more to reset; like the Dow J. Wait for the currency war to end when the FED runs out of fiat bullets or the BRIC ditch the USD. When 2015-17 comes. 

Thu, 07/12/2012 - 12:16 | 2610144 Meesohaawnee
Meesohaawnee's picture

one thing is clear at 11:15.. Ben has the short ban still in effect. And here this mornings open i actually thought it would be a free "market"..my bad

Thu, 07/12/2012 - 13:19 | 2610370 timbo_em
timbo_em's picture

So when does the Swiss 10Y (currently at .52) enter NIRP world?

Thu, 08/30/2012 - 18:40 | 2750887 JenniferS
JenniferS's picture

Libor scandal, MP's expenses scandal, phone hacking scandal, cronyism, nepotism and corruption, it is clear that the establishment in the UK is degenerate and unfit for purpose. They are the one lot who really are 'in it together'. We cannot rely on token enquires or self regulation, root and branch change is desperately needed - starting with shaking up the cosy 2 party system. Like it or not banking is a vital part of any developed economy. We need it. In fact modern life would be impossiblt without it. Luckily the problem isn't banking. The problem is the morality of the people running it and the ineptness of the people who are supposed to be regulating it. If we fix the regulation, and keep a constant watch, then over time the rest will fix itself.

Jennyfer from Britain Loans

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